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SMM Daily Review – 2012/6/19 Base Metals Market
Jun 20,2012 10:26CST
price review forecast
SHFE 1209 copper contract closed RMB 330/mt or 0.6% down at RMB 54,910/mt, Tuesday, and SHFE 1209 aluminum contract settled down RMB 220/mt or 1.39% at RMB 15,650/mt.

SHANGHAI, Jun. 20 (SMM) –

SHFE 1209 copper contract started RMB 220/mt down at RMB 55,020/mt Tuesday. After the opening, the contract followed LME copper to increase and then fluctuated around RMB 55,200/mt, with a high at RMB 55,290/mt. In the afternoon, the Shanghai Composite Index lowered to test support at 2,300 and pushed the contract to come under pressure at the daily moving average. At the tail of trading, the US dollar rose and caused LME copper to retreat below USD 7,500/mt, so SHFE 1209 copper contract slid below the support at RMB 55,000/mt to an intraday low of RMB 54,880/mt as shorts entered markets and built positions for forward copper contracts. Finally, SHFE 1209 copper contract closed RMB 330/mt or 0.6% down at RMB 54,910/mt. SHFE 1210 copper contract reported a high at RMB 55,100/mt during the day and a low at RMB 54,650/mt, with prices finally settling at RMB 54,670/mt, down RMB 370/mt or a loss of 0.67%. SHFE 1210 copper contract became the most active copper contract during the day. Trading volumes for all SHFE copper contracts fell by 143,000 lots, but positions added by 2,298 lots. Resistance at the 30-day moving average of RMB 55,000/mt was high and longs and shorts will still struggle at this price mark for the near future.

As some traders in spot markets bought copper in large quantities, cargo-holders held prices firm and helped copper premiums rise all the way. Mainstream spot copper premiums were quoted between positive RMB 250-320/mt in Shanghai in the morning business. Traded prices for standard-quality copper were between RMB 55,830-55,870/mt, and RMB 55,850-55,950/mt for high-quality copper. Overall spot copper market activity kept active in the morning. However, as copper premiums increased near the midday, purchases at prices near RMB 56,000/mt slowed noticeably, turning market participants cautious again. Downstream producers still sourced to order during the whole day. In the afternoon, as SHFE copper came under pressure and sank rapidly at the tail of trading, spot copper premium offers for high-quality copper were as high as positive RMB 340-350/mt, while mainstream premium quotations were between positive RMB 250-350/mt. Traded prices inched down to RMB 55,800-55,850/mt in the afternoon, but actual market transactions remained limited.

With LME aluminum prices continually hitting new lows and mid rumors preferential power rates will be offered for aluminum smelters, which will lead to a supply increase, aluminum prices accelerated losses. The most active SHFE aluminum contract for September delivery gapped lower at RMB 15,755/mt and settled down RMB 220/mt or 1.39% at RMB 15,650/mt, after finding its low at RMB 15,650/mt. Positions dropped 174 lots to 100,172 lots.

Producers and large traders began holding goods after prices dropped, quoting with premiums up to RMB 30/mt in the spot market in Shanghai. SME traders' selling interest was still high, however, with quotations as low as RMB 15,790/mt. Some downstream and middlemen buyers replenished stocks at the lower prices before the coming Dragon Boat Festival holiday, so the overall traded volume picked up slightly. Trading was extremely quiet in the afternoon after SHFE aluminum prices expanded losses.

On Tuesday, SHFE lead prices opened lower at RMB 15,060/mt and fluctuated narrowly in the morning. In the afternoon, SHFE lead prices fell influenced by Chinese stock markets to close at RMB 15,005/mt, down RMB 145/mt. Trading volumes were up 44 lots to 122 lots, while positions were down 2 lots to 2,178 lots.

Spot lead prices in domestic markets were relatively resistant with strong support at RMB 15,000/mt. Well-known brands such as Nanfang were mainly quoted at RMB 15,120/mt, with premiums of RMB 50/mt against the most active SHFE lead price. Hanjiang was quoted at RMB 15,070/mt, while quotations for Shenqian and brands from Gejiu region were between RMB 15,040-15,050/mt. Smelters mainly fulfilled long-term contracts, and downstream enterprises still purchased as needed to avoid risks, leaving transactions muted.

SHFE 1209 zinc contract, the most actively traded one, opened lower at RMB 14,920/mt Tuesday and moved between RMB 14,910-14,935/mt. In the afternoon, Chinese stock markets fell again, driving SHFE zinc prices to fall below RMB 14,900/mt and hit an intraday low of RMB 14,840/mt, but found support at the 5-day moving average to finally ended at RMB 14,860/mt, down 125/mt, or 0.83%. Trading volumes were down 24,986 lots to 42,094 lots, while positions were down 366 lots to 152,252 lots.

In China's domestic spot market, smelters still sold goods actively but sales were reported lower. Spot discounts did not narrow noticeably. Supply in the market was sufficient, and selling interest among dealers remained high, but buyers downstream mainly made inquires, leaving purchases limited. Transactions were weaker than the previous trading day.

In Shanghai tin market, transactions were mainly made between RMB 150,000-151,500/mt Tuesday and trading remained quiet with few deals done at low price. Jinlong, Jinhai and Yunxiang were mainly traded at RMB 150,000/mt. In the afternoon, several transactions for Weitai were concluded at RMB 150,000/mt. Mainstream traded prices for Yunxi were between RMB 150,500-151,500/mt. The depressed demand continued to hamper sales at traders.

On Tuesday, mainstream traded prices for Jinchuan nickel were RMB 124,100-143,000/mt in the Shanghai nickel market, and RMB 121,500-121,800/mt for Russian nickel. In the afternoon business, traded prices fell back, but mainstream traded prices remained unchanged. Supply of Russian nickel dropped, and the price gap between Russian nickel and Jinchuan nickel narrowed further. Market saw no supply tightness due to weak demand. 





China base metals Tuesday

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